Canberra supports Qantas-Emirates deal

MATT O'SULLIVAN
Last updated 10:48 09/10/2012

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Qantas and Emirates have won the support of the Australian federal government for their planned alliance, which has been described by transport bureaucrats as of benefit to consumers and helping to deepen competition.

In a submission to the competition regulator, the Department of Infrastructure and Transport said the proposed 10-year agreement would "enhance consumer choice, deepen competition in a number of markets ... and broaden Qantas' international network at minimal capital cost".

The government support will help the airlines win approval from the Australian Competition and Consumer Commission, which expects to make a draft ruling on the deal by Christmas.

The Transport Department noted the substantial competition from more than 30 airlines on routes between Australia and Europe, which will be the main focus of the Qantas-Emirates alliance. It emphasised a "clear trend of growth" by Chinese airlines in recent years.

"Australia is a key market for a range of international airlines and they are unlikely to cede ground to Qantas and Emirates," the department said.

Although not opposing the alliance, Air New Zealand has called for the regulator to consider the trans-Tasman route on a stand-alone basis from the rest of the Qantas-Emirates tie-up. Air New Zealand said it did not believe a co-ordination of services by Qantas and Emirates was needed on the Australia-New Zealand route to "achieve the consumer benefits as claimed.

"This is particularly acute when balanced against the potential for public detriments arising from the co-operation of [Qantas-Emirates] on pricing and capacity," it said.

"We believe the analysis of the competitive impact on trans-Tasman markets is very different to that required for the applicants' long-haul routes."

Qantas chief executive Alan Joyce will touch on benefits of the Emirates tie-up at a speech at the National Press Club in Canberra today.

Qantas last week began selling tickets on flights to London via its new hub in Dubai.

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- Sydney Morning Herald

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